The Sino-Indonesian economic ties are widely expected to burgeon into a new era, right ahead of Indonesian President Susilo Bambang Yudhoyuno's state visit to China scheduled for July 27-30.

The Indonesian Chamber of Commerce (Kadin) expects trade with China to reach 15 billion US dollars in this year, and 20 billion dollars in three years, just as both countries' leaders promised in April when Chinese President Hu Jintao visited the archipelago.

Meanwhile, local media on Monday quoted Chinese Ambassador to Indonesia Lan Lijun as saying that bilateral trade between China and Indonesia had grown at an annual rate of over 18 percent.

In 2004, total trade volume amounted to 13.48 billion dollars, a 31.8 percent increase over the previous year and almost matching Indonesia's 13.5 billion dollars export-import flow with the United States, he said.

From January to March this year, the total bilateral trade volume reached 3.76 billion dollars, he added.

"At present, China is Indonesia's fourth largest trading partner and Indonesia is China's 18th largest trading partner," Lan said.

Bilateral trade was also expected to be facilitated by the China-ASEAN (Association of Southeast Asian Nations) Free Trade Area which was begun to implement on July 20 to gradually remove the trade barriers among China and the 10 ASEAN member countries, according to reports of local media. Among the ASEAN members, Indonesia is the largest nation in terms of population.

In the aspect of commodities being traded, official data show that China's exports to Indonesia include electrical machinery and equipment, electronic goods and household appliances, textiles and motorcycles. China's principal import commodities from Indonesia are mostly resource-intensive goods like crude oil, natural gas, palm oil, paper, pulp and timber.

Meanwhile, Investment from China to Indonesia is also on the rise. Data from the Indonesia's Investment Coordinating Board (BKPM) show that total Chinese investment in Indonesia for the five-year period ending 2004 reached 6.5 billion dollars, with investments in the energy sector alone standing at 1.2 billion US dollars.

On the other hand, data from the Chinese government show that Indonesian investments in China have reached at least 2 billion dollars as of 2003.

Indonesia signed its first bilateral trade agreement with China in 1953, after officially establishing diplomatic ties with China on April 13, 1950.

Initial two-way trade value was only 7.4 million dollars in 1954, but grew to 129 million dollars over the following five years.

Direct trade between the two countries then ceased due to political reasons, but indirect trade continued by proxy through Hong Kong and Singapore, averaging some 200 million dollars a year.

Fortunately, direct trade between China and Indonesia was later restored through a 1985 agreement, which preceded a full normalization of all diplomatic ties in 1990. Since then, bilateral trade between China and Indonesia has flourished, with the balance always in Indonesia's favor.

This year, leaders of the two countries signed a joint declaration in Jakarta to establish strategic partnership relations, which further blessed the development of bilateral trade.

Source: Xinhua